This week, two separate justices rejected a last-ditch effort to keep a school district spending cap question off this November’s ballot.
Those dual orders clear the way for New Hampshire voters to decide this fall whether to cap the rate of growth of their local school district budgets, as well as the size of school administrative unit (SAU) administration spending.
This makes the November election an incredibly important one for New Hampshire because it creates for the first time a statewide opportunity to cap local property taxes.
State laws capping local property or spending growth are not just common in the Untied States, they’re the overwhelming norm.
New Hampshire is one of only four states that has no statewide mechanism for capping local property taxes.
We were one of only three, but in 2024 Maine repealed its law limiting local property tax levies.
Though property tax and spending caps come in a few different forms, it’s important to understand what they have in common.
They do not reduce property tax revenue below prior collection levels.
Rather, property tax and spending caps limit the rate at which revenue or spending can grow in the future.
Plaintiffs seeking to block this year’s ballot question tried to claim that voter approval of the cap would necessarily result in reductions to classroom spending.
But Merrimack Superior Court Justice Dan St. Hilaire rejected the claim, pointing out that none of their hypothetical examples could be shown to be a necessary consequence of a cap on the rate of SAU spending growth.
The school district tax cap that will be on New Hampshire ballots this fall does not force districts to reduce spending below current levels. It allows for spending growth. In fact, it’s one of the most generous caps in the country.
It would cap SAU revenue at the prior year’s levy + inflation + population growth.
Variations of this formula are a common way that most states protect homeowners and businesses from runaway property tax growth. Massachusetts limits its property tax growth with a similar formula applied to local government revenue. New York applies a similar formula specifically to school districts.
What voters will see in November is not a radical plot to cut school funding. It is by national standards a relatively weak effort to place a temporary restraint on SAU spending growth. That can be important for taxpayers because school districts account for more than 70% of local property taxes in New Hampshire.
And unlike the norm in most states, this cap applies only for the upcoming two-year budget. It then expires. Voters will get a chance to impose the cap again in 2028, but again only for two years.
Having the opportunity to place a modest restraint on school district spending growth for four years is better than never having the opportunity. But it hardly counts as a draconian spending cut (especially since it wouldn’t even cut spending).
If you want to decide for yourself whether the question is too complicated or confusing, here it is:
“Shall the [name of municipality] limit property tax growth for [name(s) of school district(s)] under RSA 32:5-i? If adopted for a two-year period: (1) the local property tax levy may not grow beyond the prior year’s amount, adjusted for inflation and new construction; (2) SAU central office spending may not exceed 6 percent of total school district appropriations; and (3) bonded capital costs are excluded from both limits. These caps apply only to administrative operations of the SAU central office and do not affect classroom instruction, school-based services, or other municipal expenditures. These limits may be overridden as provided in RSA 32:5-i. Adoption requires a three-fifths (3/5) majority vote.”
